Carry some cash

By Philip Brewer on 19 September 2007 (Updated 12 December 2012) 29 comments
Photo: Philip Brewer

I recommend carrying some actual cash money. When I do that, a lot of people say, "Why? Everyplace I go takes credit and debit cards." In fact, I know people who brag about spending no cash at all for weeks or months at a time. A no-cash life may be good for bragging points, but I suggest you carry some cash anyway.

I was visiting someone in the hospital last week. Several times I made small cash purchases on her behalf that might not have been so easy to make with a credit or debit card. (I got her a soda out of the machine, for example, and some sugar-free gum at the hospital gift-shop.) There was probably an ATM machine somewhere in the hospital, but I don't know where exactly, and because of the way parking was arranged there, it would have been quite unhandy to have to zip out and go find an ATM elsewhere.

My own history with cash

When I was younger I carried very little cash. I had two reasons for keeping cash-on-hand to a minimum. First, because interest rates were a lot higher, the potential return on an extra $100 in a money market account oughtweighed the hassle of an extra stop or two at the ATM. Second, I didn't have much money--not enough to take a month's spending money out of the bank, if I also had to pay rent out of the same paycheck.

I changed my ways during a visit to Germany. I'd brought a few Deutsche Marks (enough for travel from the airport to the hotel), but most of our travel money was in travelers checks. It turns out, though, that in Germany you can't really use travelers checks at stores or restaurants. They're easy to cash at a bank, but we'd arrived on a Friday after the banks were already closed, so we were looking at no more cash until Monday. (This was a while ago. Nowadays you'd just hit an ATM for local currency.)

Things turned out okay. The hotel cashed one travelers check, which gave us money for our various small purchases, and we used credit cards for the large ones. Once the banks opened, though, we went and cashed a couple hundred dollars worth of marks to carry around.

The thing was, it turned out to be really handy to have plenty of cash on hand. We didn't need to worry if some place took any particular card. We had cash if a traveling companion was short. It was so handy that I continued the practice of carrying a reasonable amount of cash, even after we came home.

Cash for living large (and small)

Times when it's good to have cash:

  • Buying something from a person, rather than a business
  • When you want to give someone a tip (or a bribe)
  • For very small purchases, such as a pack of gum
  • Purchases from vending machines
  • When you're someplace unfamiliar, such as on a trip
  • Anyplace that doesn't take plastic (Two examples: When I lived in Utah the state-run liquor stores only took cash; when I lived in California the places that towed your car away "at owner's expense" only took cash.)

People give various reasons why they don't want to carry cash. Some people claim that they're more likely to spend money if they have cash than if they have to use a card. That seems unlikely to me, but I can get behind any mental trick people use to help themselves be more frugal. Some worry that it will be lost or stolen. I haven't lost my wallet in more than 30 years, but I'm sure it would suck all the more if I had a bunch of money in it when I lost it. (And it would suck plenty to lose the credit cards and ID.)

It's possible to get along fine with little or no cash, especially if you live a circumscribed life (such as on a college campus or campus-like workplace, where you can put everything on a card). But if you live large there are going to be times and places where that doesn't work so well. Money isn't the solution to every problem, and even problems where money is the solution can often be solved with a credit or debit card. But there are some problems out there where the best solution is cash money. When you face one of those problems, it's nice to have some cash.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Linsey Knerl's picture

I second that! Just the other day we needed a small amount of change to use a payphone (no cell service where I was...) I actually had to ask my kids, "Does anyone have 50 cents Mommy can borrow?" Now I always carry at least a couple bucks in cash. Thanks!

Guest's picture
Adam

When I was younger my dad always had a $20 bill tucked deep in his wallet, his "mad money". Now I carry on with the same practice and it has come in handy on multiple occasions.

Myscha Theriault's picture

I'm in full agreement with this, particularly for the tipping, small purchase and overseas travel scenarious you mentioned.

Guest's picture
Andrew

I think it's excellent advice for people to carry around cash. My wife and I use cash for nearly all of our purchases. It's far easier to know how much you're spending if you can see the dwindling cash supply in your wallet (or purse or envelope or whatever you use to carry cash). There have been many times in my life that I was shopping somewhere that only accepted cash.

Andrea Karim's picture

If I have cash, I will use it for tipping, but I tend to spend whatever is in my wallet. If I have to break out the plastic (debit card) to buy, I'm less likely to actually make a purchase.

Guest's picture
Sunny

During the aftermath of Hurricane Katrina, many NOLA refugees were left without any money as their banks were underwater and their ATM/debit cards were left useless. In many instances, family and friends who set up their houses as shelters were gracious enough to offer personal loans or cash personal checks (often without expecting to get paid back) in order to help these NOLA residents survive those first few horrible weeks after Katrina.

This affected people trying to survive afterwards as well as people trying to drive out (gas costs $$$). It's always a good idea to have enough cash on hand to get yourself out of a bad situation like that.

Guest's picture
Guest

Sunny, I think you may be taking it a little far. Our banking system is much more secure than that. Not a single person's atm / debit card was rendered useless because banks were underwater.

Guest's picture
Mary

Are you kidding me? Unless your bank only has one branch that happened to be in Lakeview or St. Bernard Parish, this "underwater bank" thing is just a little bit blown out of proportion. I live in New Orleans and stayed near the MS gulf coast during the aftermath of the storm. We were fine w/ money. Cell phone service and gas was a different story...but the biggest problem with getting cash was when the ATMs physically ran out of money.
And the last time I checked you are supposed to stock up on water, cash, gas, food, etc., and evacuate BEFORE the storm hits.

Guest's picture

Another reason to carry cash is for those times when the power grid or banking infrastructure is down. I suspect most of the atms were not operable for a time in New Orleans.

Also, cash is pretty handy when (for instance) your spouse loses her credit cards on a business trip and you have to cancel all of your accounts. Then you're just stuck with your cash on hand and some checks...not the best situation, especially when you access your bank via the internet....

Lastly, I've long thought it was a good idea to have a small stash of cash at home. Now that our new house is pretty much finished, I think I'll try to scrounge up a few bucks to keep close at hand for emergencies.

Philip Brewer's picture

Yes, I should have mentioned disaster scenarious of both the large and small variety. Thanks, folks, for filling that gap.

Guest's picture
Guest

I live and travel near cities that most would agree can be a little on the dangerous side. I ALWAYS keep twenty or thirthy dollars in cash on my person. I'm not a shrinking violet, but I am going to risk injury over a few bucks. In a mugging situation you better have a few bucks to give up to your assailant or risk increased violence. Thank goodness it has never happened to me, but it has happened to a couple of people I know.

Myscha Theriault's picture

Another time this can be necessary is if you are living / working / traveling in an area where the government can fall at any time. It's a good idea to keep politically oriented evacuation cash available as well. Particularly if your bank is one that is tied specifically to the country you are working in . . . a colleague of mine lost his entire life savings after watching the person ahead of him get the last allowed cash out of the machine as the country they were working in erupted. I learned from his experience and only kept enough in my account to keep it open and wired most of my salary to an account in a stable nation. The rest I kept on me along with passport, a supply of visa photos and my apartment key to run back and grab my "go bag" if the need arose.  I lived off that cash and my extra tutoring money every month.

Guest's picture
Barbara

I find it so much easier to keep track of how much money you are spending when you don't just throw it all on a credit card statement and then get this huge bill. I racked up considerable debt (which I"m currently working to get out of) and as a result, I only carry enough cash on me for what I know I can spend for the day/week etc. Then, when it's gone, I know I can't spend anymore. This really helps when I know I need to get gas for my car, only have $15 in my wallet, but really want that little something. It's not a hard choice when I'm faced with that situation.

Guest's picture
Kyle J

Sure it is handy to have a few bucks on you for a small irrelevant purchase like a pack or gum or tip the bell boy, but the more important reason to carry cash is to avoid credit card debt. When you have have to pay with cash you will be less likely to come home with a bunch of crap you don't need but felt you could not live without in that moment of weakness!

Guest's picture
Kelsey

I feel like I actually spend less when I carry cash.

For example, if I'm grabbing something to eat and have a $5 bill, I'm likely to get something inexpensive, say $2 to $3 bucks, so as to not use all the cash in my wallet. On the other hand, if I was using my debit card, I'd get whatever I felt like, which would likely cost more than $5.

It's motivating not to spend when you can actually see the money disappearing from your stash :)

Philip Brewer's picture

I'm always interested in the way some people say they spend more when they carry cash and other people say they spend less.

Some people say that they'll just spend whatever cash they have, making purchases that they'd never make if they had to pull out a credit or debit card.

Other people say that seeing the amount of cash in their wallet dwindle gives them a very clear sense of how much money they're spending, whereas whatever they put on their credit or debit card is somehow invisible until they actually get the bill (at which point they're shocked at what they'd spent).

Personally, I don't have either of these reactions. Cash, credit, or debit--it's all my money and I pay attention to what I'm spending. The idea that it'd somehow be different seems a little odd to me. And the idea that it's different in opposite directions for lots of people seems even odder.

Myscha Theriault's picture

I have to say, I think it all boils down to discipline as far as how much you spend. If you don't have that completely down yet, then I guess you need to fall on whatever side of this "coin" works for you. I'm sort of where you are Philip, it's my money either way and I spend it accordingly. But I have to admit, in my younger years I didn't necessarily have that discipline, so I needed to use whatever tricks I needed to keep myself in line.

Either way, an interesting discussion topic. Have a great day, everybody!

Guest's picture

The disaster case is a reason not only to carry a small amount of cash, but to have a larger amount of cash at home as part of your home emergency kit--at least enough to cover a week of emergency expenses.

I disagree with the last guest comment--there are occasions where bank and ATM networks fail, even without Katrina-scale disasters. There have been several cases lately where a large bank has shut off ATM service to certain foreign countries due to a security exposure, for example.

Guest's picture
rstlne

I carry and use cash all the time because I participate in Where's George.

Aside from that, one reason to have cash on hand is if you're with a group of people at a restaurant and you're paying a restaurant check. If everyone has cash, then it's easier to split the check.

Guest's picture
Margaret

I live in a rural area. I drove to a town an hour away to do some shopping, and turns out some goodfornothing slimeball had cut the phone lines going into the town, so there was NO debit or credit card service, the places I wanted to go didn't accept cheques, and my bank didn't have a branch in that area, so I couldn't get any more cash either. Waste of half a day and probably twenty bucks in gas.

I find there are lots of times when you need to spend just a dollar or two, and more and more businesses will not take plastic for purchases under $5.

Guest's picture
steve in W MA

Wow. As a small business owner and someone who has worked in retail my entire life, I can't imagine people at stores being so inflexible as to realize they can copy your credit card number down, your expiration date, get your phone number, make you out a slip, and have you sign it and make the sale even though the credit card machine is down, then run the transaction through manually later. This is actually how credit card purchases were done some 15 years ago, and still can be done when there is a problem with "the machine".

Actually, I can imagine that level of lack of adaptablility and creativity. It's pretty sad though.

Guest's picture
Jon Matthias

I always carry between $20 and $40 cash. It's especially good for making purchases at small local businesses. Processing credit or debit cards costs them more money, either a percentage of the transaction cost or a flat rate that nickel-and-dimes them to death. Large retailers buy authorizations in bulk, and get preferential rates.

Guest's picture
justin

Why do you need cash for small purchases? The store has to take a card by agreement with their card processor.

Guest's picture
Mercedes

I try to keep the stuff in my pocket down to a minimum. Plus I hate carrying cash when I can honestly tell someone, dude I got no money to give you! To some angry vagrant who starts getting in my face. Honest!

Happened to me in Tucson when I was going to school there; I told the guy I didn't have any money, I had 5 bucks but I was going to use that for a sub & chips at subway. He got in my face and demanded the money, I turned away from him and he tried to hit me with his cane! Barely saw it in time to knock it aside and then I shoved him to the ground and quickly walked away. With my luck I expected the cops to go on his side, lol.

Must of needed his fix; I lived in the very poor 'down' side of Tucson during college. Cheap rent interesting surroundings!

My debit card will take care of anything if not my credit card; if they don't take either then well I don't really need it.

Guest's picture
Guest

I always carry enough cash on me to get keep me going. The last time I was caught without cash was during a power cut in London. I was stranded in the city wearing a t-shirt during a cold autumn evening. The trains stopped moving, there was no lights across the capital. I learnt one lesson that night - the cash machines don't work if they don't have power. I always carry cash now to get out those jams now.

Also the chicks dig a bloke who pulls out a fat roll of notes.

Guest's picture
Guest

My dad always taught me to have cash handy since I was young (many moons ago). The logic was you never know where you might be with work, travel, leisure, etc. and some places might just not accept cash alternatives. Well, everyone takes cash. Dad's always given me $100 cash to tuck away for emergency use in my wallet since I was young and I've kept that habit to this day.

I also hate going to the bank for any purpose, including using ATMs so I just go to the teller, withdraw enough and use it up, usually in a month or two. This also saves me time from always "having to stop by the bank" when I go out. That gets annoying when my friends have to do it 2-3x a week so I won't do it to them.

I actually spend less in cash than on my cards, even though I have cash on me. I save the cash for something that calls for it, either for convenience (small items), when it is not accepted by certain merchants (some local Chinese restaurants) or stores where you can negotiate a better price in cash.

Cash is not obsolete, far from it, even in a metropolis like L.A. where I live. There's been tons of situations where I had to lend friends cash because the merchants did not take anything else. Getting all the cash I lent out, now that's a different matter...

Guest's picture
Guest

My sympathy to the guy who got robbed. I live in a bad area where it isn't that uncommon for this to happen occasionally. If you need to carry a large sum, keep $20 in your purse or pocket with your cards, and keep the wad of cash elsewhere on your person. My own experience has been that if I hand over my wallet or empty my pocket and they see an ATM card and some cash, they grab it and take off, and you don't get hurt. Call the cops, cancel the card while you wait. You still have your money, which you do not need to mention.

One day after work I foolishly took a new cold medicine. I used my emergency $20 getting a drink to take the pill with, shoved the change in my pocket, and ran for the bus, and got on with the wallet in my hand. Sat down, fell asleep, and woke as some disgusting little gangster grabbed my wallet and jumped out the back door of the bus. This nice guy started to chase him, but this was Phoenix and it was 115 degrees outside. I said let him go, since the kid was just hauling *** down the road in the heat -- with my Phoenix Public Library card and a few feminine hygiene products.

I hope he opened the wallet in front of his friends to show them what he scored.

Guest's picture
SmBizMan

great article. In the past couple of years i started carrying cash and paying basically for everything in cash--and my goal was to have a certain amount left at the end of the month.

Now I carry cash because, it ends up being faster than credit cards. With having to use the credit card console, punching in buttons (no, i don't know the PIN for my CC, CC sale please, not debit!) etc. Cash puts the onerous back on the CASHier, while i get to stand there and keep a smile on my face, not get annoyed at a stupid CC reader.

Guest's picture
aj

the best reason to carry cash, in my opinion, is to HIDE STUFF FROM MY WIFE IN MINT.COM

i like to eat burgers sometimes. at wendy's. but if i use a credit card, it will show up in mint, and at the end of the week, 'why did you go to wendys when we have food at home? that stuff is no good for you you are going to die before i do!' 'come on honey i'm 25'

however, if i fork out $8.25 cash for a spicy chicken combo medium size, noone needs to know :)